Urgent warning for thousands on tax credits who risk payments STOPPING – what to do now to avoid losing £3,450 a year
HUNDREDS of thousands of tax credit claimants have been warned to look out for letters from this week.
HM Revenue and Customs (HMRC) is sending 730,000 households tax credit renewal packs.
The letters will be sent out between May 2 and June 19, 2024.
Each year a claim for tax credits must be renewed, otherwise the benefit could be stopped, and you could even have to pay money back.
Once customers receive their annual renewal pack they will have until July 31 to check the information is correct and notify HMRC of any changes to their circumstances which may affect their claim.
The vast majority of claims will be automatically renewed, according to HMRC.
If your notice has a black stripe, it will be automatically renewed while claimants receiving a notice with a red stripe need to renew.
Just under 10,000 customers will need to check their information and renew their claims.
There are two types of tax credits – working tax and child tax credit.
They’re given to people who are on low incomes, are registered as disabled or have children who are dependent on them.
The rates vary depending on your personal situation and there are a number of elements.
You can get up to £2,435 if you’re eligible for the basic element of working tax credits or up to £3,455 if you claim the child element of child tax credit.
Universal Credit has replaced tax credits for new claimants, but many have not yet made the switch over to the newer benefit.
Everyone will have been transitioned over to Universal Credit (UC) by 2025, the government has said.
Eligible households are being contacted via letters explaining how to make the move from tax credits to UC – a process called managed migration.
Once you receive a letter, you have three months to move over, or you could lose your current benefits.
Between May 2023 and September 2024, the DWP expects to send letters to 940,000 claimants on the following legacy benefits:
- Working Tax Credit
- Child Tax Credit
- Income-based Jobseeker’s allowance
- Income support
- Housing Benefit
But if you already claimed tax credits in the previous financial year you’re able to renew them once you’ve received your renewal pack.
Myrtle Lloyd, HMRC’s director-general for customer services, said: “Tax credits are valued by many families for their essential contribution to the monthly family budget, so to avoid payments being stopped please respond to HMRC by the July 31 deadline.”
What is managed migration?
UNIVERSAL Credit is replacing six benefits under the old welfare system, commonly called legacy benefits. They are:
- Working Tax Credit
- Child Tax Credit
- Income-based Jobseeker’s allowance
- Income support
- income-related employment and support allowance
- Housing Benefit.
If you’re on any of these benefits now, you can choose to move over – but you might not be better off.
You should consider carefully what moving over means for your money, as you can’t move back once you’re on Universal Credit.
Using an online benefits calculator can help you compare and are free and easy to use from charities such as Turn2Us and EntitledTo, and it’s also worth asking them for advice.
You may be moved over to Universal Credit if you have a change in circumstances, like moving home, a change in working hours or a have a baby.
But eventually everyone will be moved over to Universal Credit.
This is known as “managed migration” .
How do I renew my entitlement for tax credits?
You should have been sent a renewal pack, which contains all the information you need in order to renew your tax credits.
This will include information on how your circumstances have changed, and the income of you and your partner for the previous tax year, which ran from April 6, 2023, to April 5, 2024.
There are two types of renewal packs:
- If it has a red line across the first page and says “reply now”, customers will need to confirm their circumstances to renew their tax credits
- If it has a black line across the first page and says “check now”, customers will need to check that their details are correct. If they are, they don’t need to do anything and their tax credits will be automatically renewed
Around 10,000 tax credit customers will need to reply to HMRC by the deadline to confirm their circumstances for the 2024/25 tax year, or risk having their payments stopped.
Customers can renew their tax credits for free via Gov.UK or the HMRC app.
You can also renew over the phone by calling HMRC on 0345 300 3900.
What if I don’t receive my renewal pack?
The renewal packs will be sent out in batches between May and June.
HMRC has said that customers who have not received theirs to wait until after June 19.
If they still don’t receive their letter by this date, they should contact HMRC and request a renewal pack.
What if I don’t put in a renewal claim?
If you don’t put in a renewal claim you’ll lose your entitlement to the benefit and you may have to pay back any tax credits you’ve received since April 6 this year.
HMRC will then send you a letter, which will say TC607 on it to confirm this.
However, you will have 30 days to contact the HMRC and tell them why you missed the deadline.
You could be given until January 31, 2025, to confirm your details but this isn’t guaranteed and is decided on a case-by-case basis.
If you don’t respond within 30 days of receiving the letter you’ll have to pay back all tax credits received since April 6 this year.
Are you missing out on benefits?
YOU can use a benefits calculator to help check that you are not missing out on money you are entitled to
Charity Turn2Us’ benefits calculator works out what you could get.
Entitledto’s free calculator determines whether you qualify for various benefits, tax credit and Universal Credit.
MoneySavingExpert.com and charity StepChange both have benefits tools powered by Entitledto’s data.
You can use Policy in Practice’s calculator to determine which benefits you could receive and how much cash you’ll have left over each month after paying for housing costs.
Your exact entitlement will only be clear when you make a claim, but calculators can indicate what you might be eligible for.
How much could I get with tax credits?
The exact amount you can get depends on your circumstances, so take the below figures with a pinch of salt.
For working tax credit, you are entitled to a basic amount worth up to £2,435 a year, and you might get extras on top.
You can also earn more if you’re eligible for the following extra elements:
- A single parent or couple applying together: up to £2,500 a year
- Working at least 30 hours a week: up to £1,015 a year
- Disability: up to £3,935 a year
- Severe disability: up to £1,705 a year (usually on top of the disability payment)
- Paying for approved childcare: up to £6,370 (one child) or £10,920 (two or more children) a year
For child tax credit, the amount you are entitled to depends on when your children were born.
If your kids were born before April 6, 2017, you could get the “child element” of child tax credit for all of them.
You’ll also get the basic amount, known as the “family element”.
If any of your children were born on or after April 6, 2017, you could get the child element for up to two of them.
You might get the child element for more children if exceptions apply.
You’ll only get the family element if at least one of your children was born before April 6, 2017.
Here’s how much each element is worth:
- Child element: up to £3,235 per child
- For each disabled child: up to £4,170 (on top of the child element)
- For each severely disabled child: up to £1,680 (on top of the child element and the disabled child element)
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